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Zoom In on VeriSign

Kevin Kelleher

The television will be revolutionized.

That much we know. We just don't know who will start the revolution -- or when.

We're not talking blood-in-the-streets revolution, but more of a dinner-party one, in which someone comes up with a downloadable movie that's as visually appealing as television but as interactive as the Web. It means fast and cheap technology that will almost certainly employ some highly efficient peer-to-peer software.

Progress is coming in fits and starts. This month, Netflix NFLX rolled out its "Watch Now" feature, giving select subscribers the ability to stream movies on their PCs for free.

Netflix's service, limited to 1,000 movies, is being rolled out to 250,000 subscribers a week, probably so Netflix can see how -- and whether -- customers use it. It could prove an end run around postal fees if enough subscribers take to it, but for the next quarter or two it's likely to eat into operating profit if it means fewer rentals.

A less ballyhooed but just as noteworthy development came from Janus Friis and Niklas Zennström, the creators of file-sharing legend Kazaa and VoIP program Skype, now owned by eBay .

That service, titled Joost and created under the auspices of an entity called The Venice Project, claims to allow for speedy downloads of images that will look good on a large-screen TV, let alone a standard-issue PC monitor. It's interactive like YouTube, only with much better resolution.

And sure, Joost may be just the revolution everyone has been waiting for, but until it wins a large and loyal following, it will have to stand in line with Netflix and all the other would-be revolutionaries: BitTorrent, Amazon.com's Unbox, the studio-sanctioned MovieLink, Apple's iTunes and whatever Google is planning through its ownership of YouTube.

Joost's weak point right now is an absence of partnerships with film and TV production studios, which have been less keen on using the fastest, slickest technology than on making sure consumers watch their programs exactly when and how the studios instruct. So far, MovieLink, Amazon, Apple and even BitTorrent have gained ground with studio partnerships.

But there's another piece of the equation that could make a big difference in determining who wins share in the Internet-video market: People need software on their PCs to let them download movies there, so the company with the most widely distributed software program will have a key advantage.

This is no small matter. YouTube leapt past longtime stalwarts such as RealNetworks' RealPlayer partly because users didn't need to install a special program to watch videos. YouTube relied on Adobe's Flash technology, which was already installed on most PCs.

And that brings us to the third piece of online-video news this month -- the least noticed but potentially the most important. Adobe hasn't yet monetized the ubiquitous role its Flash technology plays in video sites such as YouTube, but that may change with a deal it signed to integrate Flash with a peer-to-peer software program owned by VeriSign .

That's right -- VeriSign. Not Apple or Amazon, but security software company VeriSign, which last March paid $62 million for a P2P start-up called Kontiki that was backed by Benchmark Capital, ex-Netscape founders and Adobe. The announcement said only that Adobe and VeriSign would reveal the fruits of their collaboration later this year.

But consider: Suppose the next update of Flash, which is installed on 700 million devices, included Kontiki's P2P software. Then, just possibly, those 700 million PCs and mobile devices could at a click download movies and TV shows with YouTube-like ease but with DVD-quality images.

I say "just possibly" because VeriSign has to deal with the other barriers -- security, bandwidth hogging and studio licensing. But think about what it means if they pull it off: For $62 million, VeriSign bought itself a high-resolution YouTube (which was sold to Google for 26 times as much.)

Robert Scoble, tech evangelist and former Microsoftie, raved on his blog about Kontiki's clarity and speed. "It really rocks," he wrote in a post he titled "Netflix is Dead."

"The quality wasn't distinguishable from the HD-DVD's I get from Netflix," he wrote. "Why would any of us go into a Blockbuster in the future, or wait two days for a DVD to show up from Netflix?"

VeriSign has been quietly rolling out Kontiki through partners such as Time Warner'sTWX AOL, the BBC and SkyTV to mixed reviews. A trial allowing all of the BBC's content to be downloaded won praise but also brought the usual complaints about overly restrictive digital-rights management software and harsh limits on how and when the content could be viewed.

More than anything, those issues will stave off the long-promised revolution of Internet TV. But if they're resolved this year and that revolution does happen, VeriSign might be the dark-horse candidate that could end up reigning in the new regime.